Angola Commits to Removing Fuel Subsidies by End of 2025, Aims for Sonangol’s Fiscal Improvement

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Angola plans to eliminate all fuel subsidies by the close of 2025, aiming to enable state oil company Sonangol to resume tax payments and dividends announces Finance Minister Vera Daves de Sousa. The move is part of efforts to alleviate the financial burden on governments in Africa grappling with soaring debt costs and high pump prices, although such subsidy removals have triggered protests and discontent in various countries.

Daves de Sousa acknowledges the potential challenges and notes that the full removal of fuel subsidies may stabilize by the end of 2025. The objective is to facilitate Sonangol’s regular tax payments, boost profits, and contribute dividends to the state. Sonangol, Angola’s state oil firm, has faced financial constraints and last paid dividends in 2019, coinciding with the government’s launch of an ambitious privatization initiative.

To address financial constraints and align with modernization efforts, Sonangol is expected to undergo further cost-cutting measures. The finance minister envisions a transformed Sonangol by 2026.

In addition, the Angolan government is contemplating a dual listing for Sonangol’s partial privatization, scheduled for 2025 or 2026. The dual listing, set to occur in Angola and an international bourse yet to be determined, aligns with President Joao Lourenco’s economic reform agenda to attract private investment. Daves de Sousa highlights that other privatization processes are underway, with 23 state-owned companies in the privatization pipeline and 43 more, including Banco de Fomento Angola and Unitel, awaiting initiation.

Regarding the recent Bloomberg report on central bank intervention to curb the kwanza’s weakening by restricting foreign currency trading, Daves de Sousa clarifies that the central bank is avoiding direct intervention to protect international reserves. The kwanza has maintained a stable range of around 830 to the dollar since June, following a significant depreciation linked to external debt payments and declining oil production.

Finance Minister Daves de Sousa also discloses plans to list insurer ENSA locally in 2024 as part of the ongoing privatization initiatives. The chairman of ENSA had previously indicated the sale of a majority stake in 2021.